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Volkswagen Debating About Placing Claim For Damages Over Suppliers Over Chip Shortage


01/25/2021


Volkswagen Debating About Placing Claim For Damages Over Suppliers Over Chip Shortage
The German car manufacturer and the largest auto making company of the world by Volume – Volkswagen is discussing with its major suppliers about the possibility of making a claim for damages to it because of the shortage of semiconductors, said reports quoting a company spokesman. 
 
A shortage of production and delivery of auto chips has forced auto companies al around the world to d=shut down their assembly lines which has in certain cases been exacerbated by the actions against Chinese chip factories by the former United States president Donald Trump.
 
The global auto companies that have been affected by the shortage include the likes of Volkswagen, Ford Motor Co, Subaru Corp, Toyota Motor Corp, Nissan Motor Co Ltd and Fiat Chrysler Automobiles.
 
“For Volkswagen, the top priority is to minimise the effects of the semiconductor bottleneck on production,” the Volkswagen spokesman said according to reports.  The company was working closely with its suppliers to resolve the problem, the spokesman said.
 
The auto major however is also discussing possibility of placing claims of damages together with its suppliers, the spokesman added.
 
Germany’s Bosch and Continental are among the car suppliers that have been affected by the problem. These companies significantly depend on supply of chip from manufacturers in Taiwan and other Asian countries.
 
According to reports quoting industry sources, the supply partners and chip suppliers of Volkswagen were informed by the company shortly after the first lockdown in spring about its strategic plan of ramping up production to pre-pandemic levels. 
 
Despite this early notification, the chip makers continued to shift production of semiconductors aimed for those industrial sectors that had high growth such as consumer electronics with the result that the clients of the companies in the auto segment having a shortage of the required chips, according to reports quoting industry sources.
 
Negotiations with alternative suppliers of semiconductors are currently being carried out by Volkswagen, according to a report published in Automobilwoche magazine. However there are concerns that alternative to the existing suppliers of chips will result in higher prices.
 
The magazine reported that Volkswagen us trying to convince its suppliers including Bosch and Continental about sharing of the burden and  partly compensate the company for the additional losses of the company,.
 
Currently the focus of the company was to maintain the supply chains as much as possible, a Bosch spokeswoman told Reuters. “We will discuss all further aspects of the shortage of semiconductors directly with our customers and suppliers in due course,” she added.
 
No comments from Continental were available.
 
The Taiwanese government has been approached by car making countries such as Germany to coax the country’s chip makers to help address the shortage of chips for the auto industry.
 
To reduce dependency on Asian suppliers and avoid similar problems in the future, Berlin is now planning to increase state support to increase the production capacity of semiconductors in Germany and Europe.
 
(Source:www.economictimes.com)


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